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Oil
shock from minister "In addition to this (approximately 360 sheds) there are 700 more petrol sheds in this country and no one talks about that. They have been franchised to politicians, crooks, entrepreneurs and there is a very cosy relationship between these guys and the Petroleum Corporation," an angry minister responded when asked how he planned to counter opposition to the reforms. About 120 fuel stations are now owned by Ceypetco (CPC), about 120 by IOC and another 120 up for grabs and currently under negotiation with India's Bharat Petroleum. Calling it a "most sensational revelation", Dr Amunugama told The Sunday Times FT in an interview that, "no money has been put into these; they were never modernised; they are no more than public toilets. These are things the corporation doesn't want to divulge." He said there is a potential for 300 more sheds in Sri Lanka as these (700) petrol sheds have not changed for many years. "So we are talking potentially of another 1,000 distribution points but they (unions) talk of this 120 only." Motorists panicked and trade unions were stirred after the cabinet planned to meet on Monday to discuss proposals jointly submitted by President Chandrika Kumaratunga, Power and Energy Minister Susil Premjayanth and Amunugama to reform the two loss-making institutions. The meeting was postponed following the agitation. "None of the recommendations envisage privatisation of these two state ventures. That is absolutely clear and we are even willing to amend the legislation (Acts) to emphasise that no privatisation will take place," he said. He conceded that the two cabinet papers were introduced in a hurry to meet a March 31 deadline for funding but "I think this would be extended by a month". He said the reforms may have not been properly explained to the JVP and hence "I'm having a discussion with them and hopeful we would be able to have a united approach to this." The CEB reforms involves unbundling it into three components - production, transmission and distribution and bringing them under separate boards but still under the purview of the CEB which owes Rs 80 billion to mainly state banks. The plan is to convert this 80-billion debt to a long-term loan from Japan and the ADB. "They (lenders) are not prepared to go through this costly exercise unless they believe we can convert these sick corporations to profitability." In addition to this, another Rs 6 billion would be committed to improve the CEB network. On CPC reforms, the minister said the plan is to sell a stake to Bharat Petroleum for $88 million and use that money to invest in improving capacity at the CPC refinery which now provides only 50 percent of the country's needs. "We want to raise the CPC refining capacity to almost 100 percent," he said adding that if Sri Lanka refines all its crude, it could save $3-4 per barrel and reduce fuel prices here. Currently the CPC can only refine 50 percent of demand while the balance 50 percent comes as a finished product. "The CPC should be refining all the crude that we buy. This is a scandalous situation and cannot be tolerated by any government," he said adding that even in the entry of a third player, safeguards would be introduced. He said the plan is to rationalise the system, earn money from distribution and invest it where "we should invest". In the Bharat Petroleun proposal, the government plans to retain a 51 percent stake and sell 49 percent. "We have also added our conditions that they must buy all their oil from our refinery and that in the event of a merger between IOC and BP (which are both state enterprises) then divesture becomes possible. We have closed every possible loophole to prevent the classical giving away of a government asset." |
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